Govt: 45% of exports to US outside purview of additional 10% tariffs, Pg13

Key Highlights:

• The United States imposed additional 10% Section 301 duties on goods from various economies, effective July 24.
• The Ministry of Commerce and Industry reported that an estimated 45% of India's exports to the US remain outside the purview of these new tariffs.
• 55% of India's exports will attract the additional 10% duty, which is lower than the 12.5% proposed for many other countries.
• India secured this lower tariff by issuing a notification on July 13, prohibiting the import of goods produced with forced labor.
• India did not receive the textile and apparel Tariff-Rate Quota (TRQ) exemption under the forced labor tariff framework.

Detailed Insights:

• The tariffs were announced by the US Trade Representative (USTR) following an investigation into acts, policies, and practices related to the imposition and enforcement of prohibitions on goods produced with forced labor across 60 economies.
• India's proactive measure to ban goods made with forced labor provided a tariff advantage over competitors like China, Vietnam, Thailand, and Turkiye, which face a 12.5% duty.
• This positions India among 17 countries, including Bangladesh, Pakistan, Sri Lanka, Indonesia, and Malaysia, that will incur lower tariffs, thereby largely retaining competitiveness in labor-intensive sectors.
• Discussions for the India-US Bilateral Trade Agreement (BTA) are ongoing, with both nations aiming for an early conclusion to strengthen trade relations.
• Products such as generic pharmaceuticals, smartphones, steel, and aluminum are excluded from the additional 10% duty, as they are either already subject to zero additional duties or separate US trade measures.

Key Concepts Involved:

• Section 301 of the US Trade Act, 1974: A US trade law empowering the US Trade Representative (USTR) to investigate and take action against foreign government practices deemed unfair or discriminatory to US commerce.
• Forced Labor: Work or service exacted from any person under the menace of any penalty and for which the person has not offered themselves voluntarily.
• Tariff-Rate Quota (TRQ): A two-tiered tariff system that allows a specified quantity of a product to be imported at a lower or zero customs duty, with a significantly higher tariff applied to imports exceeding that quantity.